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DATE 2/24/09

AGENDA ITEM 2

TRANSPORTATION BENEFIT DISTRICT BOARD


Olympia, Washington
February 24, 2009

Meeting of the Olympia TBD Board to Evaluate Projects and Set Rates for 2009
Craig Ottavelli, President
Joe Hyer, Vice President

STAFF CONTACT: Jane Kirkemo


City of Olympia Administrative Services Director
jkirkemo@ci.olympia.wa.us 360.753.8499

ORIGINATED BY: Transportation Benefit District Board

OTHERS NOTIFIED: N/A

ATTACHMENTS: Responses to Board questions


1. Inflation of Projects Costs for Harrison Avenue/Mud Bay Road 500-
foot Extension and the Boulevard Road and Log Cabin Road
Roundabout.
2. Email Responses to Councilmembers Machlis and Messmer
Regarding Status of the Pavement Management Program.
BUDGET IMPACT/
SOURCE OF FUNDS: The budget impact of implementing a Transportation Benefit District is
dependent on how the district is established and the project(s) funded
with the revenue. A budget outlining estimated expenses has been
included for discussion.

PRIOR BOARD REVIEW: N/A

BACKGROUND: In December 2008, the Olympia City Council adopted an ordinance


creating the Olympia Transportation Benefit District. Before establishing a
fee and project(s) to be funded by the TBD the Board asked several
questions at the February 10, 2009 board meeting

Analysis and A proposed budget for the 2009 TBD would include:
Options: Insurance $5,000
Audit 5,000
Outside counsel 5,000
Admin Support 25,000
$40,000
Staff is proposing a contract with the City of Olympia to provide the
Administrative support (prepare agendas, minutes, refunds, public
records requests and answer questions about the TBD). Staff would be
reimbursed by the TBD for actual expenses later in the year.

Other concerns/issues raised about establishing the district:

What is the cost of the 500 foot unfunded gap on Harrison/Mud Bay
Road? The planning level cost estimate for this project is $1,489,765.

What are the anticipated costs if the project were delayed 1 to 5


years? Attachment 1 provides projected costs if the 500 foot unfunded
gap on Harrison/Mud Bay Road is delayed from 1 to 5 years.

What is the current cost for the Log Cabin Roundabout and what
would the anticipated cost be if the project were delayed 1 to 5
years? The planning level cost estimate for this project is $8,565,500. Of
this amount, the City has $1,600,600 available for this project and is
currently being used to complete design and purchase ROW. An
additional $6,964,900 is needed for construction. Attachment 1 provides
projected costs if the Boulevard Road and Log Cabin Road Roundabout
are delayed from 1 to 5 years.

What is the current status of our pavement management program?


What happens to this program is we delay funding this program for
2 to 3 years? Attachment 2 is email responses to Councilmembers
Machlis and Messmer concerning the status of the Pavement
Management Program.

What are we currently spending gas tax revenues on? And how
much do we receive? The City receives approximately $1 million/year on
Motor Vehicle Fuel Tax (aka gas tax). Motor Vehicle Fuel Tax is a State
Shared Revenue imposed on each gallon of gas sold and is distributed
based on population. The City of Olympia uses fuel tax for the operating
and capital budget (both for street maintenance). In 2005, the State
Legislature changed the law eliminating the requirement to dedicate a
portion of the funds to arterial streets. Fuel tax can now be used for any
street purpose. The 2009 Capital budget includes $275000 (the historic
amount) for capital street projects. The remaining $775,000 is used to
support the General Fund street maintenance.

What are the pros and cons of capitalizing the TBD revenue stream?
Legally the Board may issue revenue debt with the car tab fees collected.
The TBD could issue general obligation debt with voter approved sales
tax debt (currently limited to a 10 year pay back). From a practical stand
point it would be difficult to issue revenue debt with the car tab fees
now. Revenue debt is always harder (greater risk) to sell than general
obligation debt. There is no experience with this revenue (history of

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collection) and Olympia is one of the first cities to implement. There is
still a risk of a state wide initiative to eliminate the legislation or a law
suit. Currently there is not a big demand in the market for revenue debt.
For these reasons it would be difficult and expensive to capitalize the
revenue stream.

ACTION(S) TO BE
TAKEN: SET THE FEE AMOUNT
Without a vote of the people, the revenue option available to the Board
is a fee of up to $20 per vehicle. The Board does not have to charge the
full $20. You may charge $10, $15 or an amount up to $20 per vehicle per
year. (In the future, if the City of Olympia ceases to use transportation
impact fees, the TBD could implement transportation impact fees on
commercial and industrial projects without a vote of the people.)
Revenue rates, once imposed, may not be increased without voter
approval. Using information from the Thurston Regional Planning Council
(TRPC) the TBD would generate approximately $634,500 per year from a
TBD with a $20/vehicle fee (assuming 20,209 households and an average
of 1.57 vhh). Staff is estimating the District will receive 3 months of
payments for the calendar year 2009 (approximately $150,000).

Revenue rates, once imposed, may not be increased without voter


approval. Using information from the Thurston Regional Planning Council
(TRPC) the TBD would generate approximately $634,500 per year from a
TBD with a $20/vehicle fee (assuming 20,209 households and an average
of 1.57 vhh). Staff is estimating the District will receive 3 months of
payments for the calendar year 2009 (approximately $150,000).

There is no time limit on when the funds must be spent. Typically, funds
that are collected for a specified period before being expended are used
to fully fund large projects or serve as a match for state or federal funds.
The public hearing on the use of the funds must estimate when the funds
will be spent.

If projects costs exceed original costs by more than 20% a public hearing
must be held to solicit public comment regarding how the cost change
should be resolved. The TBD must issue an annual report to include the
status of project costs, revenues, expenditures and construction
schedules. And, a TBD must be dissolved upon completion of the
project(s) or payment of debt service. The board may create a new TBD
following the completion of a TBD with the appropriate notice
requirements.

Implications:
• There is the same amount of administrative expenses for the
District regardless of the fee amount.
• If the fee amount is less than $20/vehicle it would take voter
approval to change.

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• With a $20/vehicle fee plus City of Olympia impact fees and
grants there are still insufficient funds for all of the current
transportation needs.

SELECT THE PROJECT(S) TO BE FUNDED

RCW 36.73.020 lays out project selection criteria to be considered:


• Reduced risk of transportation facility failure and improved safety
• Improved travel time
• Improved air quality
• Increases in daily and peak period trip capacity
• Improved freight mobility
• Cost effectiveness of the investment
• Optimal performance of the system through time
• Project must be included in the current Regional Transportation
Plan
• Must be in the boundaries of the TBD
• Other criteria as adopted by the TBD board

Using this criterion the Board shall choose a project to be funded with
TBD revenues.
The City of Olympia established a 20 year pavement Management
strategy. However, the strategy never had a dedicated funding source.
Consequently part of the funding ($1.2 million/year) came from any
available year end savings from the general fund or the capital
improvement fund. With the current economic conditions there are
insufficient funds for the 2010 pavement management funding. Funding
from the TBD could be used for pavement management.

In addition to pavement management the TBD funds may be used for


any transportation improvement contained in any existing state or
regional transportation plan that is necessitated by existing or reasonably
foreseeable congestion levels. The project MUST be within the
boundaries of the TBD (Olympia City limits).

Option 1: Implement a TBD with a $20 fee and use the proceeds to fund the
pavement management program.

Implications
1. On an annual basis this should generate approximately $634,500.
2. The proceeds benefit all areas within the district.
3. Provides a dedicated funding source for pavement management;
although not enough to fully fund the program.
4. Pavement Management Project is included in the Regional
Transportation Plan.
5. Public would see something being done every year with their money.
6. Easy to administer

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Option 2: Implement a TBD with a $20 fee and use the proceeds for Boulevard
Road improvements

Implications:
1. On an annual basis this should generate approximately $634,500
2. Provides a dedicated funding source for the project although it
would take many years to fully fund the project.
3. Project is included in the regional transportation plan
4. Proceeds of the TBD although generated from all parts of the
community would benefit only one area of town.

Option 3: Implement a TBD with a $20 fee and use the proceeds for any
transportation project in the 2009 Capital Facilities Plan and the
Regional Transportation Plan.

Implications:
1. On an annual basis this should generate approximately $634,500
2. Further implications are dependent on the project selected.

SET A DATE FOR THE PUBLIC HEARING


Proposed date is March 10, 2009 at 6:00 p.m. in the Olympia Council
Chambers.

Must provide notice of the fee amount, project(s) to be funded and the
budget for calendar year.

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